Non-Specific Notice of Potential Claim Insufficient Under Claims-Made Policy
Applying Pennsylvania law, a federal district court has held that an insured’s notice of potential claim was insufficiently detailed to trigger coverage under a claims-made policy. University of Pittsburgh v. Lexington Ins. Co., 2016 WL 3963104 (S.D.N.Y. July 21, 2016).
The insured, an architectural firm, submitted a “notice of occurrence/claim” on the last day of the coverage period for its claims-made insurance policy. The notice stated only that its senior management had been advised by its client, a university, that “this project is experiencing problems and delays in its early stages.” The policy required that written notice of a potential claim include the actual or alleged breach of duty, a description of the professional services rendered, and a description of the injury or damage that might result in a claim. After reviewing the notice, the insurer requested additional information but did not receive a response. The insurer therefore apprised the architectural firm that its notice was insufficient, and any subsequent claim would not be deemed to have been made during the policy period. The university ultimately sued the firm and, under an assignment of rights, instituted coverage proceedings against the insurer.
The court denied the university’s motion for partial summary judgment, holding that the architectural firm’s “perfunctory,” “non-specific” notice was deficient because it did not provide the information required by the plain terms of the policy. The court further noted that, under Pennsylvania law, an insurer need not show prejudice to deny coverage when an insured has breached the notice requirement of a claims-made policy. The court therefore invited the insurer to file its own dispositive motion.